2. The leather was acquired by LBB in Brazil and was later
sold to LBI pursuant to an invoice, No. 017/88, dated February
29, 1988.*fn3 Tr. 28-29, 219, 230-31, 242-44; Exhs. 27, 34.
LBI purchased the leather according to "cost and freight"
invoice terms, meaning that LBB paid for all the transport and
freight charges before the cargo was loaded on the ship.
See Tr. 28-29, 230-31.

3. Prior to loading, LBB weighed the shipment in Novo
Hamburgo, Brazil, using a scale which had been checked by
Imerto, the official organization for controlling the accuracy
of commercial scales in Brazil. Tr. 235-39, 420-22, 429-31,
442-43; Exh. 28, 29.

4. LBB then palletized the leather,*fn4 loaded it onto ten
wooden pallets, and placed the pallets on a truck at LBB's
warehouse in Novo Hamburgo. Tr. 422-26, 434-37.

5. The ten pallets of leather were driven by truck from
LBB's warehouse to the Customs' bonded warehouse of Expresso
Rio Grande Sao Paulo ("Expresso") located in the Port of Rio
Grande. Tr. 511-12.

6. LBB hired a freight forwarder named Transcontinental
Servicos e Representacoes, Ltda. ("Transcontinental") to
oversee the movement of the cargo while it remained in Brazil.
See Tr. 270. Transcontinental then hired Commissaria de
Despachos Ltda. ("CODEL") to manage the shipment while it was
at the Expresso warehouse. Tr. 270.

7. On March 5, while the goods were in the Expresso
warehouse, Lloyd delivered an empty container (CTIU 323389-7)
to CODEL. Tr. 446-48.

8. Before putting the leather into the container, a
Brazilian Treasury official counted the number of pallets and
issued a document called a "Papeleta," attesting to the type
and quantity of goods loaded into the container. Tr. 447-48,
516-17.*fn5

9. The container was then closed with Brazilian Treasury
seal # 852146, and the Papeleta was affixed on the outside its
doors. Tr. 447-54, 516-17. The Brazilian Treasury seals that
were used at the time were thin chrome-colored strips on which
was written "Brazil" and "FRS" (Federal Revenue Service). Tr.
453-54.

10. The loaded and sealed container was kept in a yard
toward the rear of the Expresso warehouse and remained there
from March 5 to March 7. Tr. 520. The yard was controlled by
the Brazilian Federal Revenue Service. Tr. 454-55.

11. On March 7, the container — with seal and Papeleta
intact — was delivered to the terminal in Rio Grande operated
by Consorcio de Terminals de Container do Rio Grande
("CONTECON"). Tr. 455-57.*fn6

12. CONTECON issued a receipt for the container, dated March
7, indicating that the container had a gross weight of 10,885
kilograms and that it was sealed with the Brazilian Treasury
seal # 852146. Tr. 455-59; Exh. 46. At the time, there were two
weight scales located at the CONTECON terminal. Tr. 458-59,
493-94.

13. Transcontinental selected Lloyd as the carrier for this
shipment. See Tr. 522. Lloyd then chose its ship, the LLOYD
SERGIPE, to transport the cargo from Brazil to the United
States. Exhs. 16, 17, 18. The LLOYD SERGIPE is a general cargo
ship. Tr. 110.

14. The LLOYD SERGIPE was scheduled to arrive in Rio Grande
between March 5 and 7, but because of mechanical difficulties
in the Port of Santos, Brazil, the ship did not arrive until
March 21. Tr. 316-18, 75, 378-82.

15. The container remained at the CONTECON terminal from
March 7 until March 23, when it was loaded onto the LLOYD
SERGIPE. See Tr. 455-59, 83, 199; Exhs. 52, 57, 63.

17. In early 1988, there had been many reported thefts from
Treasury-sealed containers located at the CONTECON terminal.
Tr. 468-70, 495-99; see Exhs. 47, 48.

18. During the period of the ship's delay — March 7 to
March 22 — LBB repeatedly asked Transcontinental to have the
cargo loaded into another company's container and shipped on a
different vessel. Tr. 316-20. However, each request was met
with Transcontinental's response that the LLOYD SERGIPE would
be arriving in Rio Grande the next day, and thus, it would not
be worthwhile to unload and reload the cargo into another
container. Tr. 316-20, 381-84, 400-01. Transcontinental's
representations were based on the information provided by Lloyd
and its agents in Rio Grande. See Tr. 316-20, 380.

20. Lloyd's sole agent at the Port of Rio Grande was
Brascon, S.A. ("Brascon"). Tr. 56-57, 82-83, 459, 490-91. As
such, Brascon was the only entity authorized by Lloyd to place
its "onboard" stamps on bills of lading issued at the Port of
Rio Grande.*fn8 Tr. 56-57, 66, 81-82.

22. These bills of lading, however, possessed different
"onboard" dates, ranging from March 10 to March 22. Exhs. 16,
17, 20. Twenty-nine of the thirty-one bills of lading bound for
New York were stamped "clean on board" on dates prior to the
arrival of the ship.*fn10 Exh. 20; Tr. 75-80.

23. The LLOYD SERGIPE set sail from Rio Grande on March 23.
Tr. 708-09. On the way to the United States, the ship stopped
at the ports of San Francisco do Sul, Vitoria, and Fortaleza.
Tr. 206.

24. On April 12, the LLOYD SERGIPE arrived in Port
Elizabeth, New Jersey, where the container was discharged at
the Maher Terminals. See Tr. 612-15, 646-47. Upon discharge,
the container was not weighed and the seals were not
checked.*fn11 Tr. 650, 651-60.

25. In order to obtain delivery of the shipment from Maher
Terminals, LBI presented an endorsed original bill of lading
stamped "clean on board March 10" to Lloyd's New York agent,
Norton Lilly International, Inc. ("Norton Lilly"). Tr. 33, 42.
The only bills of lading LBI received were those sent by LBB
stamped "clean on board" March 10. Tr. 264-66, 284; Exhs. 16,
17, 18.

26. LBI then sent its trucker, S.L.A. Transport, Inc.
("S.L.A."), to deliver the container from the Maher Terminals
in Port Elizabeth, New Jersey to LBI's warehouse in Johnstown,
New York. Tr. 612-15.

27. When the container was picked up on April 12, it
possessed the seals of both Lloyd and the Brazilian Treasury.
See Tr. 654, 668, 687-88; Exh. 35, 53. However, the horizontal
brace connected to the door hatch on the right side of the
container was bent.*fn12 Tr. 618-20, 685-87; Exh. 53.

28. S.L.A. then transported the container to the S.L.A. yard
in Gloversville, New York, where it remained overnight. Tr.
622-23. During this period, the container was kept in a secure
place in the yard, making it virtually impossible for anyone to
tamper with or break into the cargo. Tr. 624-25.

29. On April 13, S.L.A. delivered the container to LBI in
Johnstown, New York, where LBI's warehouse supervisor signed a
receipt before opening the container.*fn13 Tr 625-26.

30. The thin metal seal (Brazilian Treasury seal #852146)
appeared old and "rusty looking," and the numbers on the seal
were difficult to read. Tr. 591-92, 595. In order to remove the
Brazilian Treasury seal, the LBI supervisor merely had to pull
it with one hand.*fn14 See Tr. 592-93. A seal of this type (a
metal band approximately one quarter of an inch wide) cannot
normally be removed by simply pulling on its metal strip.*fn15
Tr. 688.

31. After the S.L.A. driver left, an LBI employee opened the
container and discovered that five pallets of leather were
missing. Tr. 590-95. The LBI employee also found the remaining
pallets in disarray — the covers were gone, the burlap
wrappings were ripped open, and there was leather lying
underneath a pallet with plastic wrapping loosely resting on
top of it. See Tr. 596-99.

32. In a letter dated April 15, LBI notified Lloyd's New
York agent, Norton Lilly, that five of ten pallets of leather
were missing. Exh. 30; Tr. 42.

DISCUSSION

A. Jurisdiction

The court has subject matter jurisdiction over this case
pursuant to 28 U.S.C. § 1333 (1982).

B. Applicable Law

LBI contends that the Carriage of Goods by Sea Act ("COGSA"),
46 U.S.C.App. § 1300 et seq. (1982), does not govern this case
because that statute applies of its own force only from the
moment the goods in question are hooked to a ship's tackle for
loading until the moment they are freed from the ship's tackle
after discharge. Pl. Post-trial Brief at 18. According to LBI,
the theft of the leather occurred prior to its being loaded
onto the LLOYD SERGIPE in the CONTECON terminal, and thus,
COGSA does not apply. Id. LBI also argues that even if COGSA
does apply by virtue of its incorporation into the bill of
lading, the shipper did not receive the bill until after the
ship departed. Id. at 19.

Contrary to LBI's position, the bill of lading contains a
"Clause Paramount" that fully incorporates COGSA and makes the
statute govern two additional periods: before the goods are
loaded on and after
they are discharged from the ship.*fn16 Pl. Exh. 16; Brown &
Root, Inc. v. M/V Peisander, 648 F.2d 415, 420 (5th Cir. 1981);
see also Croft & Scully Co. v. M/V Skulptor Vuchetich,
664 F.2d 1277 (5th Cir. 1982) (clause paramount making COGSA apply when
it would not apply of its own force). The provisions of the
Clause Paramount clearly indicate that the parties intended
COGSA to apply to the shipment as long as the goods were in the
carrier's actual custody, whether the carrier was acting as
carrier or as bailee. Saint Paul Fire & Marine Insur. Co. v.
Sea-land Service, Inc., 745 F. Supp. 186, 189 (S.D.N.Y. 1990).

Since the bill of lading contains a Clause Paramount
incorporating COGSA, the court will apply COGSA to the shipment
from the time LBB delivered the container to the CONTECON
terminal in Brazil until after discharge when S.L.A. picked up
the container from the Maher terminal in New Jersey.

Lloyd argues that LBI has failed to establish a prima facie
case because LBI has not proved that LBB delivered the full
quantity of cargo to Lloyd. According to Lloyd, the leather was
stolen while it was in the Expresso warehouse before entering
the CONTECON terminal. Lloyd maintains this theory even though
its own bills of lading indicate receipt of the full shipment
after the cargo entered the terminal.

A carrier who issues a bill of lading specifying the weight
of the cargo "represents that he has no reasonable ground for
suspecting that the weight of the goods actually received
varies from the listed weight and that he has reasonable means
of checking the weight." Westway Coffee, 675 F.2d at 33.
Furthermore, this representation "is enough for a prima facie
showing of receipt of the listed weight." Id.

In opposing the outcome of Westway Coffee, defendant relies
on Roco Carriers, Ltd. v. M/V Nurnberg Express, 1989 A.M.C.
2527 (S.D.N.Y. 1989), aff'd, 899 F.2d 1292 (2d Cir. 1990). The
court in Roco Carriers found the defendant-carrier not liable
for lost cargo, even though the carrier issued a clean bill of
lading which specified the weight of the container. 1989 A.M.C.
at 2530. The court came to this conclusion, however, only after
the plaintiff had established its prima facie case. Id. Noting
that there was no evidence of negligence on the part of the
defendant, the court stated that "[t]he fact that all the seals
remained intact throughout the time when the container was in
[defendant's] custody indicates no fault on the part of
[defendant] . . . and rebuts the prima facie showing made by
the issuance of a clean bill of lading." Id. (emphasis added).
Contrary to Lloyd's argument, therefore, Roco Carriers supports
the rule articulated in Westway Coffee that a bill of lading
which lists the weight of the cargo establishes the first prong
of a plaintiff's prima facie case — good delivery of the cargo
to the carrier.

Here, Lloyd signed a bill of lading representing that the
gross weight of the cargo was 8,413 kilograms — the weight of
all ten pallets that the shipper packed into the containers at
the Expresso warehouse. Exhs. 16, 17, 18, 27; Tr. 28, 126, 230.
Lloyd contends that the scales at the CONTECON terminal were
inoperative, thus making it impracticable to weigh the
container. See Def.Mem. of Law at 9-10 (dated Sept. 25, 1990).
However, COGSA provides a way to avoid potential liability in
such circumstances: "no carrier . . . or agent of the carrier,
shall be bound to state or show in the bill of lading any . . .
weight which he has reasonable ground for suspecting not
accurately to represent the goods actually received, or which
he has had no reasonable means of checking. 46 U.S.C.App. §
1303(3) (1982) (emphasis added); Westway Coffee, 528 F. Supp. at
116; Woodhouse Drake & Carey (Trading), Inc. v. S.S. Hellenic
Challenger, 472 F. Supp. 31, 33 (S.D.N.Y. 1979). Thus, if it was
impracticable to check the accuracy of the weight listed by the
shipper, Lloyd should not have signed the bill of lading which
contained that representation. Because Lloyd did sign the bill
of lading, however, LBI has sustained its burden of proving
that the Lloyd received the full shipment of leather.*fn17
Furthermore, since Lloyd has not offered sufficient proof that
it received less than that amount, LBI has established the
first prong of its prima facie case.

2. Outturn by Carrier

Upon receiving delivery of a shipment, the consignee must
notify the carrier of any shortage or defect in the goods; if
the shortage or defect is not apparent, notice must be given
within three days of delivery. 46 U.S.C.App. § 1303(6) (1982).
Failure to give timely notice creates a presumption that the
carrier delivered the goods in the condition specified in the
bill of lading. Sumitomo Corp. of America v. M/V Sie Kim,
632 F. Supp. 824 (S.D.N.Y. 1985).

Lloyd contends that LBI's notice of deficiency was untimely
because it was dated April 15 — "more than five days after
discharge." Def.Mem. of Law at 21 (dated Sept. 25, 1990)
(emphasis added). COGSA, however, explicitly requires that
"[i]f the loss is not apparent, the notice must be given [to
the carrier] within three days of delivery" to the consignee.
46 U.S.C.App.
§ 1303(6) (1982) (emphasis added).*fn18 Here, the absence of
the five pallets was not apparent from the external condition
of the container, since one of the seals, although easily
removable, appeared intact. Tr. 625-26, 590-93. LBI therefore
had until April 16 (three days after the delivery date of April
13) to give Lloyd notice of the loss. Accordingly, plaintiff's
letter of April 15 satisfied the notice requirements of COGSA.
See Exh. 30.

Since LBI proved that it delivered the full shipment of
leather to Lloyd and that it gave Lloyd timely notice of the
missing leather, LBI has established its prima facie case.

D. Defenses

Once the plaintiff establishes its prima facie case, the
burden shifts to the defendant-carrier to prove that the harm
resulted from one of COGSA's excepted causes for which the
carrier is not liable. 46 U.S.C.App. § 1304(2), (4) (1982);
Woodhouse, 472 F. Supp. at 33.

1. "Catchall" Exception

COGSA's "catchall" exception relieves the carrier and the
ship from responsibility for loss or damage that occurs without
the carrier's actual fault or privity. 46 U.S.C. App. §
1304(2)(q) (1982).*fn19 The burden, however, is on the carrier
to prove that "neither the actual fault or privity of the
carrier nor the fault or neglect of the agents or servants of
the carrier contributed to the loss or damage." Id.

Here, Lloyd has failed to sustain its burden. Lloyd asserts
that the theft could have occurred in the Expresso warehouse
over the weekend of March 5, before the cargo was loaded onto
the LLOYD SERGIPE. However, the only evidence Lloyd submitted
to support this theory was that the container remained in the
yard at the rear of the warehouse. See Tr. 455-59, 83, 199;
Exhs. 52, 57, 63. However, given the fact that the container
remained at the CONTECON terminal for more than two weeks, and
that there had been many occurrences of theft in the port of
Rio Grande, it is more probable that the theft occurred after
the container was delivered to the CONTECON terminal. Thus,
without more, Lloyd's bare assertions as to when the theft
could have occurred are insufficient to rebut LBI's prima facie
case.

2. Deviations

COGSA also exempts a carrier from liability when cargo damage
is caused by a reasonable deviation from the specified route of
voyage or from the terms in the contract of carriage.*fn20
Here, the defendant deviated from the contract of carriage in
two respects: first, by issuing of erroneous bills of lading,
and second, by stowing of the cargo onboard the ship's weather
deck without authorization.

(a) Erroneous Bills of Lading

In this circuit, a carrier is liable for the loss or damage
of cargo if the carrier issued an "on-board" bill of lading
erroneously representing that goods were loaded aboard its
ship, regardless of whether or not that representation was
fraudulent. Berisford Metals Corp. v. S/S Salvador,
779 F.2d 841, 846 (2d Cir. 1985), cert. denied, 476 U.S. 1188, 106 S.Ct.
2928, 91
L.Ed.2d 556 (1986).*fn21 In Berisford, containers filled with
tin ingots were stuffed, closed, locked and sealed, and
transported to a storage yard controlled by the Brazilian
government, where receipts were issued indicating weights equal
to those listed on the shipping documents. Berisford, 779 F.2d
at 843. After the containers were loaded aboard the vessel, the
carrier issued a "clean on board" bill of lading for the
specified number of ingots and their corresponding weight, even
though the carrier had neither weighed nor counted the cargo.
See id. After opening the containers at the destination port,
the purchaser discovered that over half the cargo was missing
even though the seals appeared intact and there had been no
evidence of tampering. Id. In finding that the carrier had
issued a false bill of lading, the court stated that

[w]hether one likens the carrier's issuance of
false bill of lading with respect to its loading
of cargo to a "deviation," a "breach of warranty"
or a representation which it must be "estopped" to
deny, its adverse impact on trade and on reliance
on bills as an essential method of facilitating
trade is serious.

Id. at 846. The court then elaborated on the commercial
significance of bills of lading:

When the proper bill issues, the seller then
ceases to assume any risk of loss or damage. The
carrier, by issuing the bill, enables the seller
to collect full payment of the purchase price from
the buyer since presentation of an on board bill
also serves to satisfy the buyer that the goods
have not been stolen or lost while in the custody
of the carrier prior to loading, an interval
during which the seller bears the risk of any loss
in any transaction requiring such a bill.

Id. at 847. Thus, if the accuracy of such documents were
subject to doubt, "the entire structure would be weakened as a
method of carrying out commercial transactions." Id. In holding
the carrier liable, the court emphasized that a carrier is held
to a higher standard of care when it "makes a representation in
a bill of lading with respect to its own conduct . . . since [a
carrier] is reasonably expected to be aware of its own actions,
including whether or not it has loaded the cargo . . . or has
loaded the cargo below or above decks." Id. at 847 (emphasis in
original) (citations omitted).

In this case, Lloyd issued bills of lading which represented
that the pallets of leather were "clean on board" the ship on
March 10, when in fact, the ship did not even arrive at the
port until March 21. See Tr. 300-01. Lloyd contends that LBB
requested the backdating of these bills of lading for "credit
requirements." Def. Post-trial Mem. of Law at 2; Def.Pretrial
Mem. of Law at 8. Contrary to Lloyd's theory, however, LBI has
shown that given the nature of the transaction between itself
and LBB, there were no credit requirements. Specifically, the
payment for this shipment was made on an open account basis by
a credit on LBI's books against an existing debit, which
reflected money LBI had previously advanced to LBB.*fn22 Tr.
29-30, 32, 49-50, 277-83, 315. The "onboard" bill of lading
evidenced satisfaction of the order and acted as security for
the payment. Tr. 31-32, 292-93. Thus, if LBB could not produce
an "onboard" bill of lading for the shipment, LBB would have to
reverse the money credited to it by LBI. Tr. 31-32; see also
Tr. 374, 377-78. In light of this financial arrangement, it is
highly unlikely that LBB would request backdated bills of
lading in order to fulfill "credit requirements" for LBI.

(b) Stowage

A shipper is entitled to expect below-deck stowage under a
clean bill of lading unless he has agreed otherwise, or unless
above-deck stowage is customary in that particular port.
Ingersoll Mill. Mach.
Co. v. M/V Bodena, 829 F.2d 293, 299 (2d Cir. 1987), cert.
denied, 484 U.S. 1042, 108 S.Ct. 774, 98 L.Ed.2d 860 (1988).
However, above-deck stowage is not per se unreasonable, and
thus, the carrier has the opportunity to show that the
deviation from the contract of carriage was reasonable.
Electro-Tec Corp. v. S/S Dart Atlantica, 598 F. Supp. 929 (D.Md.
1984); see also Ingersoll, 829 F.2d at 301 (burden is on
carrier to prove "that the shipper consented to something other
than the usual and customary arrangement"). Whether a stowage
deviation was reasonable depends on the surrounding
circumstances. If a carrier proves circumstances such as space
limitations, safety and loading difficulties, or the custom and
practice within an industry or between the parties, then
unauthorized stowage deviations may be held as reasonable.
O'Connell Mach. Co., Inc. v. M.V. Americana, 797 F.2d 1130 (2d
Cir. 1986).

Here, Lloyd stowed the cargo on the weather deck of the LLOYD
SERGIPE without asking or receiving permission from the LBB to
do so. Furthermore, given the occurrences of looting at the
port of Rio Grande in early 1988, the on-deck stowage created
a substantial risk of danger to the goods. See Tr. 249-50,
468-70; Exhs. 47, 48. Since Lloyd presented no evidence to
indicate that such on-deck stowage was reasonable, the court
finds that stowing the container on the ship's weather deck
constituted an unreasonable deviation from the contract of
carriage.

In sum, the defendant has not sustained its burden of
rebutting plaintiff's prima facie case. The court concludes,
therefore, that the loss of the leather was caused by the
ship's delay, as well as by the carrier's unreasonable
deviations from the contract of carriage in dating the bills of
lading and in stowing the cargo. For these reasons, Lloyd is
liable to LBI for the missing pallets of leather.

E. Package Limitation

Prior to COGSA's enactment, an unreasonable deviation from
the contract of carriage deprived the carrier of any limitation
on liability "on the ground that such deviations ousted the
contract of carriage and made the carrier fully responsible for
the cargo as an insurer." General Elec. Co. Int'l Sales
Division v. S.S. Nancy Lykes, 706 F.2d 80, 87 (2d Cir.), cert.
denied, 464 U.S. 849, 104 S.Ct. 157, 78 L.Ed.2d 145 (1983).
Post-COGSA cases in this Circuit have held that any
unreasonable deviation will deprive the carrier of § 4(5)'s
limitations on liability. Id. (citations omitted). The court in
General Electric, supra, explained the rationale for this rule:

[E]xposing carriers which engage in unreasonable
deviations to the risk of full liability has the
salutory effect of discouraging such deviations. .
. . [T]o allow carriers to limit their liability
when an unreasonable deviation causes damage to
cargo not only would weaken the carrier's primary
duty of care to cargo under [COGSA], but would
render meaningless the § 4(4) distinction between
reasonable and unreasonable deviations.

Id. (citations omitted).

When a carrier is found liable based on false representations
in its bill of lading, it may not benefit from COGSA's package
limitation on liability. Berisford, 779 F.2d at 846, 847
(citing 46 U.S.C.App. § 1304(5) (limiting liability to $500 per
package)). The Berisford court stated that "the $500 per
package limitation of liability may not be invoked by a carrier
that has issued an on board bill of lading erroneously
representing that goods were loaded aboard its ship, regardless
of whether or not the carrier acted fraudulently." Id. at 846.
Furthermore, COGSA's per package limitation on liability does
not apply to a carrier where the cause of damage was an
unreasonable deviation in stowage. Rather, the carrier is
liable in full as insurer of the cargo. Ingersoll Milling Mach.
Co. v. M/V Bodena, 829 F.2d 293, 301 (2d Cir. 1987), cert.
denied, 484 U.S. 1042, 108 S.Ct. 774, 98 L.Ed.2d 860 (1988).
Accordingly, since Lloyd issued false bills of lading and
unreasonably deviated in its stowage of the cargo, its
liability may not be reduced by COGSA's package limitation
articulated in 46 U.S.C.App. § 1304(5).

Lloyd has failed to show that LBB delivered less leather than
was listed in the bill of lading. Furthermore, LBB proved that
it did deliver to Lloyd ten pallets of leather weighing 8,413
kilograms as specified in the bill of lading. The evidence at
trial clearly established that the leather was counted, weighed
and sealed at LBB's premises. Tr. 420-23. Furthermore, the
weight of the shipment is reflected in four different
documents: LBB's packing list, the Brazilian Government's
domestic shipping document ("Nota Fiscal"), the Export License,
and the Certificate of Origin. Exhs. 28, 29, 32, 33, 34. The
pallets of leather were loaded on a truck in the presence of an
LBB employee, and transported to the Expresso warehouse in Rio
Grande. Tr. 425. The shipment arrived at the warehouse intact,
accompanied by the Nota Fiscal. Tr. 510. The pallets were then
recounted inside the Expresso warehouse, checking them against
the Nota Fiscal. Tr. 512-514. The LBB employee and a government
official witnessed the stuffing and sealing of the container.
Tr. 516-18, 447-48, 451-53. Finally, when the container reached
the CONTECON terminal, the officials there issued a receipt for
the container, Exh. 46, which stated its weight, and did not
indicate that the seals or Papeleta had been disturbed. Since
Lloyd did not provide any evidence to the contrary, the court
must infer that Lloyd received the shipment in full from LBB.
Tupman Thurlow Co. v. S.S. Cap Castillo, 490 F.2d 302 (2d Cir.
1974). Given LLB's proof of good delivery to the carrier, LLB
is not liable to Lloyd for any part of the missing leather.

G. Damages

LBI seeks compensatory and punitive damages, and both LBI and
LBB have requested attorneys' fees. Pl. Post-trial Brief at 26;
Third-party Def.Trial Mem. at 25; Pretrial Order at 25. For the
reasons set forth below, the court grants only LBI's request
for compensatory damages.

1. Punitive Damages

Nothing in the language of COGSA either prohibits or provides
for punitive damages. Armada Supply, Inc. v. S/T Agios Nikolas,
639 F. Supp. 1161, 1165 (S.D.N.Y. 1986). Moreover, nothing in
the legislative history indicates that Congress even considered
the question of punitive damages. Id. Given this lack of
legislative guidance, post-COGSA courts have applied principles
of general maritime law to the issue. Id.

Usually, punitive damages are only awarded in admiralty cases
based in tort rather than breach of contract. Thyssen, Inc. v.
S.S. Fortune Star, 777 F.2d 57 (2d Cir. 1985). The court in
Thyssen concluded that liability for a stowage deviation is
based on contract theory, and thus, declined to impose punitive
damages against the defendant-carrier. Id. at 65-66. The court
reasoned that the objective of deterrence is already achieved
"in cases of deviation by the severe sanction of disallowing
exceptions and limitations in the bill of lading, especially
when this is carried to the point of making the carrier an
insurer even with respect to losses have no causal relation to
the deviation." Id.

Furthermore, even when the admiralty cause of action is based
in tort, punitive damages are awarded only when the defendant's
conduct is so morally reprehensible that it implies a criminal
indifference
to civil obligations. B.F. McKernin & Co., Inc. v. U.S. Lines,
Inc., 416 F. Supp. 1068 (S.D.N.Y. 1976) (citing Buttignol
Constr. Co. v. Allstate Ins. Co., 22 A.D.2d 689, 253 N.Y.S.2d
172 (2d Dept. 1964), aff'd, 17 N.Y.2d 476, 266 N.Y.S.2d 982,
214 N.E.2d 162 (1965)). For example, one court awarded punitive
damages when a carrier willfully converted the shipper's fuel
oil in order to avoid an arrest warrant and to extort payment
from the cargo owner. Armada Supply, Inc. v. S/T Agios Nikolas,
639 F. Supp. 1161, 1163 (S.D.N.Y. 1986). In another case,
however, the court declined to award punitive damages even if
the loss had been caused by the defendant's gross disregard of
the plaintiff's rights. B.F. McKernin, 416 F. Supp. at 1073
(defendant's misdirected shipments caused plaintiff to receive
its cargo one month later than expected). The McKernin court
stated that even if these acts were done 'with gross disregard
of plaintiff's rights,' they "do not 'imply a criminal
indifference to civil obligations,' and are not so 'morally
culpable, or . . . activated by evil and reprehensible
motives,' or 'aimed at the public generally' as to justify an
award of punitive damage." Id. at 1073 (quoting Buttignol, 22
A.D.2d at 689, 253 N.Y.S.2d at 173).

Here, Lloyd's liability is based on breach of contract. Even
if — as LBI alleges — Lloyd also committed an intentional
tort by fraudulently backdating the bills of lading, such
conduct does not rise to the level of moral turpitude required
for an award of punitive damages. While Lloyd's conduct in this
matter was clearly unprofessional and dangerous to the
negotiability of bills of lading, full liability for the lost
cargo will sufficiently deter such conduct in the future. Thus,
the court denies plaintiff's request for punitive damages.

2. Attorneys' Fees

Both LBI and LBB have requested an award of attorneys' fees
pursuant to 28 U.S.C. § 1927 (1988) and Fed.R.Civ.Proc. 11.

A court has the power to award attorneys' fees to a
successful litigant if his opponent "has commenced or conducted
an action 'in bad faith, vexatiously, wantonly, or for
oppressive reasons.'" Dow Chemical Pacific Ltd. v. Rascator
Maritime S.A., 782 F.2d 329, 344 (2d Cir. 1986) (quoting F.D.
Rich Co. v. United States ex rel. Industrial Lumber Co.,
417 U.S. 116, 129, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974)).
However, in order to ensure that litigants are not deterred
from asserting colorable claims, an award of attorneys' fees
must be based on "'clear evidence that the challenged actions
are entirely without color and [are taken] for reasons of
harassment or delay or for other improper purposes.'" Id.
(quoting Weinberger v. Kendrick, 698 F.2d 61, 80 (2d Cir.
1982), cert. denied, 464 U.S. 818, 104 S.Ct. 77, 78 L.Ed.2d 89
(1983)); see also Kanematsu-Gosho Ltd. v. M/T Messiniaki Aigli,
814 F.2d 115 (2d Cir. 1987) (record did not support finding of
clear evidence of bad faith since plaintiff's arguments were
colorable). Whether a claim is colorable turns on "whether a
reasonable attorney could have concluded that facts supporting
the claim might be established, not whether such facts actually
had been established." Id. (emphasis in original) (quoting
Nemeroff v. Abelson, 620 F.2d 339, 348 (2d Cir. 1980)).

In this case, Lloyd's conduct in litigating its defenses and
claims does not rise to the level that would justify an award
of attorney's fees. In support of their requests, LBI and LBB
rely on the fact that Lloyd did not take testimony from any of
its employees or agents while all parties were in Brazil, that
its only witnesses were two employees of Transcontinental, and
that Transcontinental refused to have any of its files copied.
Pl.Post-trial Brief at 10. While these actions are not
commendable, there is no evidence that they were undertaken to
harass or delay the litigation. Furthermore, even though
Lloyd's claims against LBB were ultimately meritless, they were
colorable insofar as a reasonable attorney could have concluded
that facts supporting the claim might have been established at
trial. The court therefore denies LBI's and LBB's request for
attorneys' fees.

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